Mobile wallets are increasingly gaining adoption, and millennials are leading the way, according to a recently published study by CCG Catalyst.

Apart from payment capabilities, mobile wallets incorporate loyalty cards, coupons, ID cards, event tickets, alerts, and notifications. It makes sense then that millennials — those aged between 18 and 34 — are embracing this convenient mobile tool and using it to engage with brands.

Mobile wallets are the capstone to the app experience. App engagement is in a state of crisis, as users spend less time in a majority of their apps and more within just a few. A good mobile wallet can offer businesses the ability to engage users with an in-app experience — without the cost of building and maintaining an actual app — from the beginning of the journey through the end by re-engaging them with notifications and saving their digital receipts at the close of transactions. Because of this, integrating mobile payment features into a brand's mobile strategy is vital to capturing the future market.

Mobile wallets are striking a chord with millennials for a number of reasons:

Millennials monitor spending regularly. Mobile wallets, like banking apps, allow users to check their balances regularly. However, a resounding number of participants in the CCG survey (93.5%) prefer nonbanking mobile wallets. This could be because a user's bank doesn't offer a mobile wallet, or that the user is unaware of the bank's mobile wallet.

Millennials like that mobile wallets offer loyalty programs, special offers, and coupons. Millennials want their mobile wallets to be more than just a convenient mobile payment option. In a recent Urban Airship study that asked consumers what they want in their mobile wallets, 67% of respondents said they wanted loyalty cards, and 62% said they wanted coupons.

Millennials enjoy the app-like engagement capabilities that mobile wallets offer. Wallets give brands the ability to reach out and remind users of an upcoming expiration date, or about their current loyalty bonus.

Nevertheless, a poorly designed and managed mobile wallet could result in negative network effects. Badly managed platforms can create negative feedback loops through word-of-mouth or app store reviews. This can then reduce value of the brand in the process. Companies that have added mobile wallets and payment options must monitor the entire process of the mobile wallet, guaranteeing users a frictionless system of payment.

Mobile payments are becoming more popular, but they still face some high barriers, such as consumers' continued loyalty to traditional payment methods and fragmented acceptance among merchants. But as loyalty programs are integrated and more consumers rely on their mobile wallets for other features like in-app payments, adoption and usage will surge over the next few years.

Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile payments that forecasts the growth of in-store mobile payments in the U.S., analyzes the performance of major mobile wallets like Apple Pay, Android Pay, and Samsung Pay, and addresses the barriers holding mobile payments back as well as the benefits that will propel adoption.

Here are some key takeaways from the report:

In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. We expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020.

Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.

Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay.

In full, the report:

Forecasts the growth of US in-store mobile payments volume and users through 2020.

Reviews the performance of major mobile wallets like Apple Pay and Samsung Pay.

Addresses the key barriers that are preventing mobile in-store payments from taking off.

Identifies the growth drivers that will ultimately carve a path for mainstream adoption.

To get your copy of this invaluable guide, choose one of these options:

Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP

Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of how mobile payments are rapidly evolving.